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Sunday, February 7, 2010

Anti-poverty Weapon: The Confucian Concept of Family

Kung Fu Tzu (Confucius) of ancient China collated his time’s prevalent relational culture as follows: The family first. Then comes the clan, the clan’s social network, the tribe, the village. All are one’s own families. Last comes the state which is everybody’s family, with the emperor as father. In dealing with all these families, one has to work for social harmony at all times, for harmony redounds to common good. To attain social harmony, everyone has to know his place and his limitations within his organizations and within society. The focus must be on Duty, not on Rights. The common good must always prevail over individual benefit.

From 1860s when Confucian Japan began to adopt Western-style corporations as weapons against poverty and industrial backwardness, Kung Fu Tzu’s culture asserted itself. The Japanese corporation became ‘family.’ Whenever possible, the biggest Japanese companies took in employees for life and showered them with benefits as the ‘corporate children.’ The gaps in salaries between ranks and between managers and their worker teams were not wide. Workers performed as teams, their managers as true ‘big brothers’ evidenced by their willingness to accept such small differences in pay between ranks. Managers and workers routinely studied production systems and made suggestions on improvements without expecting ‘instant reward.’ Reward came for everyone thru improved sales, profits, and bonuses that at times were given four times a year. The various hierarchies of line-level and managerial teams constantly searched for improvements in product quality, production process, world-scale marketing, building of corporate groups, and planning with state ‘fathers’ for conquest of world markets. The entire Japanese employee population became one ‘family’ struggling against 1st World economies in competitive business.

One sees the effects of this Confucian culture today. Overseas Chinese control 40%-70% of non-Confucian Southeast Asian nations’ economies. Overseas Chinese residing in various Southeast Asian countries form mutual help associations and business chambers that become members’ sources of business information, contacts, merchandise credits and cash loans. ‘Good name’ association members are able to access part of the $4 trillion in stock market capital and bank deposits in Hong Kong, Singapore and Mainland China. Hardly any ‘native’ Southeast Asians are able to directly penetrate such networks. In 1987, Overseas Chinese were first to open joint venture factories in Mainland China. Today China is poised to become ‘top dog’ worldwide in Gross Domestic Production come 2050 or so.

Confucian Japan had an even brighter success story. In 1860s Japan quickly industrialized thru government importation of entire factories, industries and technologies from US, German and UK companies. The industries were later sold at low prices and on installment to the Japanese oligarchy. State-business synergy enabled Japan to challenge Western imperialist powers and beat them in their own game of building huge Asian markets thru 'diplomatic threat' and use of military force. The expensive game (in massive losses of wealth and lives) ended in Japanese military defeat in 1945. However the ‘conqueror’ (USA) quickly allowed Japanese industry to rise again. Reason: UN forces were losing the Pacific Rim to China’s Communist army and only Japan had the industrial might to help hold the Capitalist frontier. Japan used the consequent billions of dollars in US reconstruction loans to begin a conquest of market niches all over the world. By 1960s, Japan had risen to second richest nation worldwide (the USA was No. 1), beating by a wide margin the long-standing European imperialist powers. In the 1990s despite world recessions, Japanese ‘mass capital’ was largest worldwide at $12 trillion in bank deposits and investment instruments held by the thrifty Japanese public. These days the Japanese masses are actually wealthier than US masses, considering the far narrower Japanese wealth gaps (due to small differences in executive and worker pay). In the USA, executives earn an average of 40 times the salaries of line workers. Additionally, US masses are nose-deep in debt while Japanese citizens’ savings, stocks and bond holdings are still the highest worldwide.

What are the lessons for hapless non-Confucian 3rd World economies? The Philippines for one has a tiny economy at a mere 1/40th of Japanese production. Bank savings and stock market assets come up to less than $100 billion equivalent. The production of all Philippine businesses does not even approach the sales of just one major Japanese conglomerate company. The Philippine ‘family’ is blood family and nothing more. The society as ‘family’ and politicians as ‘fathers’ are laughable concepts, for unlimited corruption is a state tradition. The Philippine governmental system of checks and balances among state bureaucracies and political parties has become a model of government paralysis, as Party interest has become the guide. Politicians consider the business sector as milking cow and nothing more, a tradition that creates economic paralysis and widespread poverty. Regime planning focuses on how to spend taxes and state loans on showy projects that earn contractors’ commissions for top-to-bottom bureaucratic signatories. ‘Standard’ skim-offs have risen from 10% in the 1960s to 60% these days, divided among national-level politicians down to village-level officials. State-business planning for production and mass wealth is not possible, for the two sectors distrust each other.

The Philippine populace cannot become ‘family’ either, for they are perpetually embroiled in all manner of religious and political debates. Winning arguments is much preferred over winning friends, customers and future business. Companies fight tooth and nail over tiny local markets. There are hardly any corporate mergers to access international markets. Trust is a scarce currency among Philippine entrepreneurs. Every agreement has to be written down to the fine print, so unlike Chinese business culture wherein word is bond, and ‘face’ is enough to get unsecured credits.

Philippine oligarchs for their part will never stomach the concept of workers as ‘family,’ for tradition teaches that employees are mere tools for acquisition of more wealth. Further, Philippine rich-poor gaps are so stratospheric that the rich have a world of their own that is so strange from that of the masses. ‘Gods’ and ‘slaves’ cannot be ‘family.’ Workers have retaliated for decades thru strikes and work stoppages that scared away foreign investors. Lately, companies have used job scarcity as an effective tool to minimize wages and employee benefits thru contractual employment, outsourcing, and endless recycling of ‘trainees.’ Not one Philippine entrepreneur seems to think that raising employee incomes results to larger markets which means more sales and profits. ‘Each to himself’ is the prevalent culture. All these considered, one way out of poverty becomes clear for the Philippines and the rest of the 3rd World: create mutual help and social harmony among all sectors of society by adopting the Confucian concept of ‘family.’ The 3rd World can even improve on the Confucian culture by passing laws that grant state loans to thousand-employee groups that set up joint ventures with 1st World corporations. Such laws will enable employee masses to earn high ‘sideline income’ (dividends) while acquiring fortunes in stock shares. Employee part-ownership of companies thru state loans will fast-track the development of a Confucian culture while building what the 3rd World sorely lacks: economic democracy.

About Me

Author is a Bus.Adm. Marketing graduate from University of the East, Manila Philippines. He has worked as bank credit investigator, as Research Section Chief for a World Bank-funded co-ops development program of a gov't agency, as fishing boat partner, as dept. secretary of Saudi Shell, as farmer and passenger jeep operator, and as director's secretary, Saudi Min.of Interior. Author has researched rich-poor gaps and elite wealth-making ways for over 40 years as an obsession. Some results are posted in this blog. The findings recommend an imperative towards a happier human history: your leadership in a world-scale anti-poverty war!